The per tyre price structure of a cycle made by the Cycle Company Ltd. is as follows:
Question:
The per tyre price structure of a cycle made by the Cycle Company Ltd. is as follows:
This is based on the manufacture of 1 lakh tyres per annum.
The company expects that due to competition, they will have to reduce selling price, but they want to keep the total profit intact. What level of production will have to be reached, that is, how many tyres will have to be made to get the same amount of profits, if:
(a) the selling price is reduced by 10 per cent,
(b) the selling price is reduced by 20 per cent?
Transcribed Image Text:
Material Labour Variable overheads Fixed overheads Profit Selling price | 888 100 50 50 200
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Related Book For
Management Accounting Text Problems And Cases
ISBN: 9781259026683
6th Edition
Authors: M Y Khan, P K Jain
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